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The graying of Arkansas: loads of "old money" are now transforming the Arkansas economy.

Three decades ago, a pair of quail hunters paused atop a ridge in northeast Benton County to survey the lay of the land.

John Cooper Sr. looked out over the valley along Little Sugar Creek and envisioned a retirement community.

Cooper described in detail how he would develop the project if he owned the land.

Clayton Little, his attorney and hunting partner, watched and listened as Cooper pointed out where a golf course should go, where a community center should be built and where homesites should be.

The result was Bella Vista Village, which now encompasses 36,326 acres. The project, begun in 1965, is home to 36,793 property owners, six 18-hole golf courses, three country clubs and more.

Bella Vista symbolizes the state's success in attracting retirees.

No one keeps exact statistics on Arkansas' retirement industry, but observers believe it is almost a $1 billion business.

Migrating retirees brought at least $100 million in net income to the state during the years 1985-90, according to American Demographics.

The influx of retirees to the Mountain Home area has been so great in recent years that locals have dubbed the Northern transplants "Chicags."

As a result of all this, the median age of Arkansas keeps inching up. One of every four Arkansas residents is now at least 55 years of age. And Roger McMennamy, the 49-year-old president and chief executive officer of Cooper Communities Inc., would like to see the number of retirees go higher.

"Our industry is going to see a period of significant growth because of the age wave," McMennamy says.

The first batch of baby boomers is approaching retirement age. The surging demographic wave will cause the number of Americans 65 years of age or older to double during the next 35 years.

The economic impact of retirement-aged Americans is staggering. Consider that:

* Retirees spend 90 percent of their average annual income of $33,000 in their local economies.

* Retirement income can lead to job creation the same way industry generates jobs.

* Retirees have higher-than-average net worths. In the Hot Springs area, the average net worth of incoming retirees is $215,000.

* Retirees own mortgage-free homes 80 percent of the time. Often, they purchase homes in their retirement communities with cash.

* Retirees derive most of their income from Social Security, pensions and investments. Such income is more stable and less prone to recessions than the income of average workers.

* According to Advertising Age, the 50-plus age group controls 70 percent of the wealth nationally and accounts for 40 percent of consumer demand.

"Here was a group with money, leisure time and a desire to leave the long winters behind," McMennamy says of his company's original vision. "They were people looking for a product to purchase. That product was the retirement lifestyle."

He describes Arkansas as "a major player in the retirement industry."

But McMennamy believes the state must do more to woo the 5 percent of senior citizens who move to other states when they retire. He thinks Arkansas should formally recognize the retirement business as an industry and then create a state office to promote and develop that industry. Some believe the office should be part of the Arkansas Industrial Development Commission.

The percentage of Americans above the age of 65 who don't work has grown to 85 percent, but a third of those retirees would prefer to work some. In other words, many believe they have too much free time. That creates the ironic situation of needing job opportunities to attract some retirees. And there are few part-time job opportunities in Arkansas.

The state Department of Parks and Tourism is the closest thing to a state agency that deals with the retirement industry. And its involvement is tangential at best. The department's strongest link is tourism advertising, much of which is directed at the senior market. But such marketing efforts don't specifically address retirement.

"We probably reach the same crowd |that would be reached~ if we had a retirement campaign," says Richard Davies, the department's executive director. "The problem is there's not a comprehensive piece |of literature~ to give people who inquire about it."

During the past six months, the Arkansas Realtors Association has discussed with state officials the possibility of producing a privately funded information packet for potential retirees.

Although having a state agency devoted to the retirement industry might be a good idea, creating a new government entity during tight fiscal times is easier said than done politically.

"What it is going to come down to is |a question of~ who is going to foot the bill for this effort," Davies says.

His department's budget is earmarked for either parks or tourism. And there isn't much to spare in the state's general revenue fund.

Carlie's Complaint

Carlie Smith of Horseshoe Bend in Izard County has strong opinions about what state government's role should be when it comes to attracting retirees.

"It isn't going anywhere until the state gets behind it and starts pushing it," Smith says. "The state needs to put some full-time staffers on it, but nobody seems to want to do that."

Smith, a 70-year-old native of Poughkeepsie in Sharp County, returned to Arkansas after making his fortune as a commercial developer in California, Arizona, Nevada and Oregon. The February issue of Arkansas Times estimates his worth at $25 million.

In 1988, Smith bought the 80-room Hillhigh Hotel and Spa at Horseshoe Bend along with 12,000 acres of the bankrupt Horseshoe Bend Development Co.

Smith is taking a traditional approach to attracting retirees, developing Cedar Glade, an 18-hole golf course adjacent to the hotel.

Golf courses played a key role in the success of Bella Vista-based Cooper Communities. The company has invested about $60 million in recreational amenities at its developments. Three of those developments -- Bella Vista Village, Cherokee Village and Hot Springs Village -- are in Arkansas.

With retirees playing more than 350,000 rounds of golf each year on Cooper Communities courses, it is easy to see the draw of recreational features.

The company has 14 golf courses at its three Arkansas developments. In addition to Bella Vista, there are:

* Cherokee Village. Begun in 1954, it covers 13,273 acres in Sharp County and has 24,065 property owners.

* Hot Springs Village. Begun in 1970, it covers 27,008 acres in Garland and Saline counties and has 29,306 property owners.

Cooper Communities also has opened a pair of developments outside the state. They are:

* Tellico Village. Begun in 1986, it covers 4,676 acres in eastern Tennessee and has 3,665 property owners.

* Savannah Lakes Village. Begun in 1989, it covers 3,987 acres in western South Carolina and has 1,402 property owners.

"You've heard the term 'the future lies with the young,'" McMennamy says. "That's still true, but to an even larger extent, Arkansas' economic future lies with our older citizens. The Natural State is graying. Retirement is one of our state's true growth industries."

What's Going On Now?

Cooper Communities serves as a barometer of what's going on in the retirement industry at large.

In 1989, 40,000 prospective buyers visited developments owned by Cooper Communities.

Last year, only 23,000 came.

Part of the drop can be attributed to the company spending less money on marketing. The marketing cuts were part of Cooper's reaction to the recession.

In recessionary times, more buyers classify lots for retirement homes as luxury items -- something that can wait until the economy improves.

Conversely, more people take early retirement -- willingly and unwillingly -- when there's an economic downturn.

"As a result, we do tend to have our |sales~ activity remain at a fairly high level," McMennamy says.

Low interest rates don't hurt.

Still, housing starts dropped from 649 in the company's five developments in 1989 to 569 in 1991. The average price of homes at those developments is about $100,000.

The company has made a conscious effort during the past 18 months to reduce its $10 million inventory of lots and "spec" homes.

Cutting overhead translated into a 25 percent staff reduction. But reducing debt, slashing capital expenses and limiting development while building cash reserves during lean times has helped the company make a profit during each of its 37 years.

"We're in a ... strong cash position in contrast to some of our competitors," McMennamy says.

Cooper's 1-to-4 ratio of debt to equity is just the opposite of companies such as General Development Co. The Miami-based enterprise went into bankruptcy court with $695 million of debt and $232 million of equity.

"If you look at the companies hardest hit by this recession, you'll see that most assumed mass debt during the go-go period of the 1980s," McMennamy says. "When a company is burdened with a debt of $4 or $5 for every $1 of equity, it doesn't take long to erode profitability and increase financial risk.

"While debt may keep other CEOs awake at night, it doesn't interfere with my sleep ... If we've learned one thing in 37 years, it's that real estate is a cyclical business. You have boom times and bust times, and the secret is to remain profitable during the down times."

Things are expected to turn around quickly for the retirement industry once the country moves out of the recession. Nationally, the retirement housing market is projected to grow from $3 billion to $35 billion during the next decade.

Considering that Cooper's Arkansas communities already have attracted 80,000 property owners and 20,000 permanent residents, it could mean a massive migration of new residents to the state.

Retirees are pushed away from where they once worked and pulled toward Arkansas by a number of factors.

Reasons for moving -- known in the industry as "push factors" -- include crime rates, population density and traffic counts. That's not to mention taxes that are too high and winters that are too long.

"Pull factors" include the desire to be near family, a more temperate climate and accessibility to cultural, educational and health care amenities.

Many retirees are more interested in having four distinct seasons than they are in the endless summers of Arizona and Florida. The state's natural beauty is also a major selling point.

Finally, it doesn't hurt that Arkansas has the sixth-lowest tax burden among the 50 states.

"I am downright ecstatic when I look toward the future," McMennamy says. "I'm in a business that sells a product to retirees. And my customer base is expanding as we speak."

"...As a nation, and as a state, we are growing older. But Arkansas' demographics are driven by more than just an aging population. People are moving to Arkansas to retire, and they are bringing their money with them."

Gray Power

The 50-plus population:

* Controls 77 percent of U.S. financial assets.

* Has more than $160 billion in discretionary spending ability.

* Reads more newspapers than any other age group.

* Eats out three times a week on average.

* Gambles more than any other age group.

* Spends more on travel and recreation than any other age group.

* Purchases 25 percent of all alcoholic beverages.

Also, consider these facts:

* One American turns 50 every 40 seconds.

* Each day, more than 5,900 people turn 65, and 4,300 people in the 65-plus age group die.

* 10 percent of senior citizens have children who also are seniors.

* In 1983, Americans age 65 and older outnumbered teen-agers.

* In 1900, 4 percent of the population was age 65 or older. The percentage had increased to 11.3 percent by 1980 and 12.6 percent by 1990. In Arkansas, the growth was even more dramatic. About 13.7 percent of the state's population was 65 or older in 1980. The percentage had risen to 14.9 percent by 1990.

* In 1984, there were 10.4 million single women age 65 or older but only 2.7 million single men in that age group. After age 65, men are eight times more likely to remarry than women.

* Grandparents make 25 percent of all toy purchases in the United States.

* Less than 3 percent of television characters are above the age of 65.

* More than 1 million Americans live in retirement communities.

* About 63 percent (19.5 million) of all seniors are heads of their households. Of that group, 75 percent own their homes.

* Sex for 75 percent of seniors in a national study is now the same or better than when they were younger.

Sources: Age Wave, American Association of Retired Persons, Administration on Aging and Cooper Communities Inc.
COPYRIGHT 1992 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:retirees move to Arkansas
Author:Waldon, George
Publication:Arkansas Business
Date:Feb 10, 1992
Previous Article:Moving out of the reading room.
Next Article:Moving up the ladder.

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